2. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Pershing Square’s Stake Value: $1,964,590,000
Percentage of Pershing Square’s 13F Portfolio: 18.22%
Number of Hedge Fund Holders: 48
Hilton Worldwide Holdings Inc. (NYSE:HLT) is an American multinational hospitality company that operates hotels under the Waldorf Astoria Hotels & Resorts, Canopy by Hilton, Hilton Hotels & Resorts, Hilton Garden Inn, Hampton by Hilton, and Hilton Grand Vacations brands, in addition to others.
Securities filings for Q4 2021 reveal that Bill Ackman’s Pershing Square owns 12.5 million shares of Hilton Worldwide Holdings Inc. (NYSE:HLT), valued at $1.96 billion, representing 18.22% of the total holdings.
In 2021, Hilton Worldwide Holdings Inc. (NYSE:HLT)’s revenue for the year stood at $2.4 billion, reflecting a year-over-year growth of 52.75%. Net income in 2021 came in at $410 million, a strong rebound from the net loss of $715 million in the preceding year.
On February 22, Wells Fargo analyst Dori Kesten raised the price target on Hilton Worldwide Holdings Inc. (NYSE:HLT) to $160 from $147 and kept an Equal Weight rating on the shares after the Q4 results were published. The analyst continues to appreciate Hilton Worldwide Holdings Inc. (NYSE:HLT)’s high margin/fee driven model and believes the lodging demand recovery will benefit the company in 2022. However, the shares are trading at a significant premium, and the analyst thinks greater share price upside can be found elsewhere in the sector in the short-term.
Among the hedge funds tracked by Insider Monkey, 48 funds were bullish on Hilton Worldwide Holdings Inc. (NYSE:HLT) at the end of Q4 2021, compared to 44 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is one of the biggest position holders in the company, with 7.3 million shares worth $1.14 billion.
Here is what Pershing Square Capital Management has to say about Hilton Worldwide Holdings Inc. (NYSE:HLT) in its Q4 2021 investor letter:
“Hilton is a high-quality business with a multi-year runway of accelerated earnings growth and an exceptional management team. Industry conditions poised to exceed pre-COVID levels in the near term.
HLT well positioned for enhanced long-term performance.
-Average daily revenue per room (“RevPAR”) likely to recover to pre-COVID levels before the end of 2022.
-Occupancy is improving with average daily rate (“ADR”) already above pre-COVID levels.
-Ability to change room rates daily provides a hedge against inflation.
HLT well positioned for enhanced long-term performance.
-Market share likely to increase over time.
-Committed to higher long-term structural margins given productivity actions.
-Substantial capital return over time.
COVID-19 validated HLT’s unique high-quality asset-light business model.
-Ability to deftly navigate the “1,000-year-flood” supports higher valuation.
Hilton is poised to deliver long-term earnings meaningfully greater than pre-2020 levels. HLT’s share price including dividends increased 40% in 2021 and has decreased 2% year-to-date in 2022.”
